presentation of draft fgeb

7/28/2019 Presentation of Draft FGEB

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ELECTRICITY BALANCING FRAMEWORK GUIDELINES

Presentation of Draft FG on Electricity Balancing, 29.5.2012

TITRE

Electricity BalancingFramework Guidelines

Presentation ofDraft for consultation andInitial Impact Assessment

29/05/2012Presentation of Draft Framework Guidelines


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EBFG process

. Scoping phase (from April 2011 to December 2011) 7 NRAs drafting team meetings;

3 expert group meetings;

1 workshop in Ljubljana.

. Letter from EC to submit the EBFG (18 January 2012) EBFG is expected to be finalised by 18 July 2012.

.Consultation phase until 25 June 2012, 12:00


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Expected timeline

Draft FrameworkGuidelines positively

evaluated by ACER BoR

April

May

July

August

September

June

End 2012

Publicconsultation

Evaluation of

responses fromstakeholders

Start of draftingElectricity Balancing

Network Code(s)by ENTSO-ELast changes

in texts

Presentation of

Draft FG

29 May

End of publicconsultation

25 June

ACER final approval


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. Roles & responsibilities, including support involvement ofconsumption;

.Harmonised technical specifications to facilitate offering acrossbalancing areas, compatible products & timeframes, harmonisedrules for remuneration of offers;

. Harmonised and non-discriminatory framework for imbalancesettlement;

. Rules for the use of cross-border capacities.

Scope of Framework Guidelines(Invitation letter from EC)


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Initial Impact Assessment1. Policy objectives

. Guarantee / enhance operational security How does the proposed option affect short term operational security?

. Improve competition in balancing markets What is the impact of the proposed option on competition?

. Increase social welfare What is the impact of the option on the overall social welfare?

. Facilitate the integration of intermittent generation What is the impact of the option on the integration of IG? Does it hamper the further IG deployment?


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Integration / harmonization


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Identified options

OPTION A: status quo

. Continuing the current voluntary approach;

. Projects as BALIT and GCC will continue to developbut without any further harmonization at Europeanlevel

. Possibly a fully integrated balancing marketimpossible to be achieved


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Identified options

OPTION B: European exchange with minimumharmonization requirements

.Identification of selected cross border products to beexchanged

. Key concept: exchanges of surpluses both for energyand reserved

. Implementation models:BSP-TSOTSO-TSO without common merit orderImbalance netting

.Minimum harmonisation


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Identified options

OPTION C: European exchange of balancingservices by means of a defined(medium/high)level of harmonization ofNational arrangements

. Key elements harmonized (products, PTU, GCT etc)Settlement?

. Key concept: every available resource (consideringnetwork constraints) is shared in the common merit

order possible use of margins

. Implementation models:Imbalance nettingTSO-TSO with common merit order (activation of replacement reservesand frequency restoration reserves)


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Identified options

OPTION D: Single European balancingmechanism possible creation ofsupranational TSOs

.Market design harmonized (BSP, BRP, procurementand settlement) at least at synchronous area level

. Key concept: fully integrated market

.Main advantages: guarantee that the most efficientresources are used, optimization of reserves througha centralized sizing and procurement, commonmanagement of the system also in critical situation


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Initial Impact AssessmentAssessment of policy options

Criteria Option A Option B Option C Option D

Effectiveness

Security of supply - + + ++

Competition - + ++ +++

Social welfare - + ++ ++

Renewables -- + ++ + +

Time of implementation ++ - -- ---

Efficiency - + ++ +

Coherency - + ++ +


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Initial Impact AssessmentMedium term preferred policy option

While Option D is considered the most efficient, Option Cseems the only possible to be implemented in the mid term

Responsibility to balance the system remains at NationalTSOs

Margins should have limited effects on overallefficiency and should progressively decrease

Amount of procured balancing reserves shouldprogressively decrease

Other key harmonization areas: products, pricing method,

imbalance settlement Exchange of reserves less prescriptive Reservation of interconnection capacity: only upon a

duly detailed cost benefit analysis


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Main objectionWHY NOT START FROM OPTION B?

. Indeed Option B may represent a first interestingstep, but

. Not enough guarantees of improving system efficiency;

. Not a real integration, lack of control on actually activatedbids;

. Only most expensive resources to be made available

. Suboptimal use of balancing resources and transmissioncapacity

. Insufficient expected increase in social welfare

. Long implementation process (to create compatible cross-border products) with limited gains


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Study commissioned by the EC

.Intended to assist ACER in drafting the ImpactAssessment

.Analysis on the feasibility and on technical,economic and social impacts of the identifiedoptions

.Quantitative assessment to support strategicdecisions

.Main inputs expected at the end of theconsultation phase


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Framework GuidelinesTHE SCOPE

. General provisions Scope, links and interdependencies, existing arrangements

. General principles NRAs, TSOs, BSPs, BRPs, transparency, reporting

. Procurement of balancing services Activation and cross-border exchanges of balancing energy Procurement and cross-border exchanges ofreserves

.Reservation and use of interconnection capacity for balancing Underlying grid model, use and reservation

. Balance responsibility and imbalance settlement


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Framework GuidelinesMAIN ELEMENTS: BALANCING ENERGY

Harmonisation of products (with possible local specificities)

Common principles for the pricing method (marginal pricing) and selection process (MeritOrder)

Harmonisation of intraday gate closure times, as close to real time as possible

Activation of balancing energy

Cross-border exchanges of balancing energy

No guideline on Frequency Containment Reserves FCR (Primary Control)

Step 1 : imbalance netting between adjacent control areas;

Step 2 : coordination to optimise the activation of Replacement Reserves RR;

Step 3 : coordination to optimise the activation of Frequency Restoration Reserves FRR.

BASE : TSO to TSO model with a common merit order


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3 YEARSBalancing energy from RR

- Possible margins for TSOs

- Possible regional approach

Coordination between TSOs

to activate FRR and reduce costs

SECURITY:

Unless a CBAdemonstratesthat it is notpositive

5 YEARS at the latestBalancing energy from FRR

Optimisation

in using

automatic

reserves

Framework GuidelinesTHE PROPOSED ROADMAP

- No margin for TSOs

- European-wide

7 YEARS at the latestBalancing energy from FRR & RR


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Consultation questions

PRICING METHODOLOGY

Do you consider that harmonisation of the pricingmethod is a prerequisite to establish a TSO-TSOmodel with common merit order list for balancing

energy? Do you support PAC principle?

MARGINS

Do you think that margins should not exceedthe reserve requirements needed to meet the

security criteria which will be defined in networkcodes related to System Operation?


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Consultation questions (2)

IMPLEMENTATION MODELS

Do you support to aim at similar target models forFRR and RR? Do you think appropriate to

distinguish manually and automatically activatedFRR reserves in terms of target model or timing ofimplementation ?

Do you support the proposed timing for

implementation?REGIONAL APPROACH

Do you consider regional implementation asrelevant milestones which are to be aimed at?


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Framework GuidelinesMAIN ELEMENTS: BALANCING RESERVES

Harmonisation of products (with possible local specificities)

Common principles for the procurement process (relation to BSPs)

Coordination between TSOs for the sizing of reserves according to LF code provisions

Procurement of contracted reserves

Cross-border exchanges of contracted reserves

If reservation of cross border capacity isneeded, it will allowed only where it can be

demonstrated it would result in increasedoverall social welfare

Subject to CBA performed by TSOsand submitted to NRAs for approval

No charge for the use of XB capacity for theexchange of balancing energy after IGC

Capacity for day ahead trade Capacity for AS

Marginal value of

capacity for day

aheadtrade

Optimalallocation

Marginal value of

capacity for trade

withAS


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Framework GuidelinesINCENTIVES and BALANCE RESPONSIBILITY

Marginal pricing = stronger incentives to participate and to be balanced

NC to oblige Balance responsible parties (BRPs) to be balanced in day-ahead timeframe

BRPs to be incentivised to be balanced in real time No special treatment for RES

ENTSO-E to assess (CBA) the need to harmonise imbalance settlement period at European-level

Balance responsibility and imbalance settlement

Transparency

Consistent with ERGEGs proposal to EC with respect to balancing data

Derogations

Possible derogations can be granted by national regulators

Maximum period of 2 years


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Consultation questions (3)

PRICING

Do you support pay-as-cleared / marginal pricingprinciple?

SETTLEMENT

Do you consider important to harmonizeimbalance settlement? Do you think the EBFGshould be more specific on how to do it?


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Thank you for

yourattention

Thank you for your attention!

www.acer.europa.eu

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